ARGENTINA: SALTA GOVERNOR OFFERS CONSTRUCTIVE CRITICISM OF GOA

Código Fecha Clasificación Origen
08BUENOSAIRES1058 1 August 2008 Confidencial / No para extranjeros Embassy Buenos Aires

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VZCZCXYZ0002
RR RUEHWEB

DE RUEHBU #1058/01 2141204
ZNY CCCCC ZZH
R 011204Z AUG 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 1675
INFO RUCNMER/MERCOSUR COLLECTIVE

C O N F I D E N T I A L BUENOS AIRES 001058

SENSITIVE
SIPDIS

E.O. 12958: DECL: 08/02/2018
TAGS: PREL, EAGR, EAIR, AR
SUBJECT: ARGENTINA: SALTA GOVERNOR OFFERS CONSTRUCTIVE
CRITICISM OF GOA

REF: A. BUENOS AIRES 1009
B. BUENOS AIRES 994

Classified By: Ambassador E. A. Wayne for reasons 1.5 (b & d)


SUMMARY


1. (C) In a private dinner in Argentina’s northwestern
province of Salta, Governor Juan Manuel Urtubey criticized
the GoA and its head, President Cristina Fernandez de
Kirchner (CFK), for the botched attempt to raise export taxes
on agricultural goods, which led to a prolonged conflict
between the GoA and the agricultural sector that was only
recently resolved. Affirming his continued support for and
faith in CFK, Uturbey saw a silver lining in the final
outcome, stating that it renewed the people’s trust in
Congress and that the designation of a new, "open-minded"
Cabinet Chief (Ref A) could be a positive change. He also
expressed concern about the recent GoA decision to
renationalize a flagship airline, noted that energy
investment in his province was on the upswing, and discussed
his possible participation in the August 17-19 Americas
Competitiveness Forum in Atlanta, which he subsequently
decided to attend. END SUMMARY.


AFTERMATH OF THE FARM STRIKE


2. (C) Ambassador met July 28 with Governor Juan Manuel
Urtubey of Salta at the Governor’s residence as part of a
trip to Salta July 28-29 (Septel). Urtubey, as in prior
meetings (BA 948, 311), was quite candid, offering criticisms
of the CFK administration, but also his support. He noted
that he has been a friend of CFK for many years, dating to
when he was a Diputado and she a Senator in the Argentine
Congress, and worked together on a bicameral committee. He
said that she spoke with him July 23 about the Senate vote
which would have sanctioned the increase in agricultural
export duties unilaterally imposed March 11 by the GoA. She
insisted that he talk freely to her, without the deference
due the President. He said he told her that the biggest
problem in the process was not the message of raising taxes,
but the way in which she delivered that message. He told her
she needed to be more moderate and less conflictive when
dealing with opposing viewpoints, and that she must engage in
dialogue with those favoring other options, as well as with
Congress and governors.

3. (C) Urtubey cited to the Ambassador several positive
aspects of the resolution of the conflict, including that
"people can trust Congress again" (i.e., see it as
independent, rather than a rubber stamp for the President),
and that it "decompressed" a very difficult social situation.
He also says that an official at a large Argentine bank told
him that, beginning the very next business day after the
Senate vote, credit activity - which had been very slow
during much of the conflict - picked up significantly. He
commented on the recent change of Cabinet Chief, stating that
he was a friend both of outgoing Alberto Fernandez and
incoming Sergio Massa, and expressed hope that the change
could "refresh" the policy-making process. He added that
"Massa is more open-minded than most" in the administration.
The question is whether he will have "the space to act."
Urtubey said that with changes in style and some good policy
decisions, he believed CFK could regain enough popularity to
govern effectively through her term. "This is a chance for a
new start." Interestingly, CFK’s July 29 speech in Salta was
delivered in a very positive style and got positive reviews
from otherwise very critical business and finance figures
present. At present, tourism and business are being stymied
by dependence on Aerolineas Argentinas.


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SALTA BANKING ON NEW CIVAIR AND ENERGY INVESTMENTS


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4. (C) Urtubey was also critical of the GoA decision to
renationalize Aerolineas Argentinas (Ref B), expressing his
concern that the costs were too high: "$900 million in debt,
plus operating costs." He stated that governors of several
northern provinces, including Salta, were working to
establish a new regional airline, which would cover many
areas currently served only by Aerolineas Argentinas. He
said that they would be able to receive good financing terms
for new aircraft from Brazil’s export bank.

5. (SBU) Turning to energy issues, Urtubey expressed his
pleasure over the new thermo-electric generator which was to

be activated the next day (more details Septel), and also
noted that there was significant new gas exploration going on
in Salta at present. He stated that some of the exploration
was to tap reserves as deep as six kilometers underground,
and thought that Salta could end up doubling its proven gas
reserves, which are currently 20% of Argentina’s total. He
attributed the new exploration to the GoA’s "Energy Plus"
program that allows incremental generating capacity to charge
private industrial users rates closer to market norms. He
said he believes that the current conflict in Bolivia is
encouraging energy investment in Salta, noting that many
energy companies are operating on both sides of the border.
Since the facilities near the Bolivian border are essentially
drawing from the same underground gas reserves, he said that
companies were deciding to increase production on the side of
the border that currently had the most favorable conditions,
which right now is Argentina.

6. (SBU) In response to the Ambassador, Urtubey confirmed
that he had received an invitation to attend the Americas
Competitiveness Forum in Atlanta, but had not confirmed his
attendance. He said it would depend on official activities
related to San Martin Day, an important Argentine holiday on
August 18 - the middle of the three-day conference.
Ambassador explained many of the reasons Urtubey should
participate in Atlanta. (Post subsequently learned that he
has decided to attend. We will work with his office to
coordinate his travel and participation in related events.)
Ambassador also raised the possibility of Salta developing a
"sister-state" relationship a counterpart in the United
States, citing examples of other Argentine provinces which
had done so, and offering to facilitate communications if the
governor was interested in a particular state.


COMMENT


7. (C) As in prior conversations with the Ambassador,
Governor Urtubey was quite frank, and displayed his support
for market-based economic policies and fully functioning
democratic institutions in Argentina. He clearly sees
himself as a critical ally of the current administration and
a friend of the President whose barbs are meant to help CFK,
not to undermine her. He could help the government in
another important way — his positive stance towards energy
investment in his province could help Argentina meet its
energy needs, removing an important stumbling block from the
GoA’s path.
WAYNE